Chief Economic Adviser (CEA) Krishnamurthy Subramanian is all set to present his first Economic Survey on Thursday, which will also be the first Survey presented under the second term of the NDA government.
“Looking forward with excitement to table my first — and the new Government’s first — Economic Survey in Parliament on Thursday,” Mr. Subramanian tweeted on Tuesday. The Survey will be presented in Parliament at noon.
While much attention will be given to the analysis of the economy that every Survey incorporates, focus will also be on Chapter 2, which is conventionally written by the Chief Economic Advisor himself. This chapter usually covers the CEA’s views, issues they want to highlight, and the ideas where further discussion is needed.
A look at some of the key issues brought up by previous CEAs could provide context to Mr. Subramanian’s first attempt at Chapter 2, and also whether these ideas go on to be adopted.
Arvind Subramanian took a dynamic approach to the Surveys during his term as CEA (October 2014 to June 2018), using Chapter 2 to present radical ideas that he felt needed more discussion.
His first Survey of 2014-15 highlighted the potential of the Jan Dhan-Aadhaar-Mobile (JAM) trinity and its ability to make huge leaps in financial inclusion, service delivery and, as he put it “wiping every tear from every eye”. This is a model that the government has adopted in a big way, using Aadhaar and One-Time Passwords on mobiles as authentication for a slew of government services.
The Jan Dhan Yojana aimed at providing bank accounts to all has also seen widespread implementation.
In his next Survey, Mr. Subramanian highlighted the difficulties associated with exiting business in India — a key problem that he said contributed to the high number of stalled projects and bad loans with banks. Here too, the government has made significant strides, notably with the Insolvency and Bankruptcy Code.
It was in his Survey of 2016-17 that Mr. Subramanian diverged the most from convention, devoting several chapters to ideas and analyses that he felt would add to the national discourse. It was here that he raised the idea of a Universal Basic Income (UBI) for all Indians.
“UBI’s appeal to both ends of the political spectrum makes it an idea whose time has come, perhaps not for immediate implementation but at least for serious public deliberation,” Mr. Subramanian wrote.
The idea has not yet met with much acceptance on either end of the political spectrum, but the Congress party’s election manifesto promise of a ₹72,000 per year income for all the poor, and the BJP government’s PM KISAN scheme aimed at providing a basic income for all farmers, are a version of Mr. Subramanian’s UBI idea.
Raghuram Rajan spent only a little more than a year as the CEA (August 2012 to September 2013) before he went on to take over as Governor of the Reserve Bank of India. His commentary in his only Survey (2012-13) focussed extensively on employment and the need for quality jobs.
“The central long-run question facing India is where will good jobs come from,” Mr. Rajan wrote. “Productive jobs are vital for growth. And a good job is the best form of inclusion… India’s challenge is to create the conditions for faster growth of productive jobs outside of agriculture, especially in organised manufacturing and in services, even while improving productivity in agriculture.”
This contribution to the national discourse is particularly relevant today, with government data showing that unemployment is at a 45-year high. Incidentally, even the current CEA recently weighed in about the need to focus on the quality of employment. He said that focussing on the unemployment rate missed the point, and that the key aspect was meaningful employment.
Kaushik Basu, who was CEA from December 2009 to July 2012, presented three Economic Surveys during his term. His first commentary in the 2009-10 Survey, coming as it did in the immediate aftermath of the global financial crisis, dealt extensively with how to stimulate GDP growth. The second (2010-11) was almost exclusively about inflation, its causes, effects and how to control it.
It was in his third Survey (2011-12) that Mr. Basu made his most radical suggestion. In a relatively small box in Chapter 2, Mr. Basu made the argument that while large-scale corruption must be dealt with strictly, there was a risk that over-regulation could hamper the legitimate activities by public institutions.
“While we need to ruthlessly crackdown on corruption, it must, at the same time, be recognised that the fear of a large and cumbersome anti-corruption bureaucracy can be detrimental to risk taking and may hamper legitimate activities in public institutions,” Mr. Basu said. In essence, be strict about corruption but not over-zealous.
To illustrate his point, Mr. Basu cited a paper on the Indian banking sector that showed that lending activities in bank branches slowed down noticeably every time some vigilance activity was conducted there. Notably, this effect persisted for two years!